SPECULATORS OF FOREX TRADING
One important point to remember about the Forex market is that even if commercial and financial transactions are part of the scale of trade, most currency trading is focused on speculation. In other words, much of the exchange volume comes from dealers who buy and sell based on intraday market fluctuations.
The amount of trade produced by the speculators is estimated to be more than 90%! The size of the Forex trading market implies that liquidity ( the volume of buying and selling at any given time) is incredibly high.
It makes it easy for someone to purchase and sell money. From the investor’s point of view, liquidity is very crucial in determining how quickly the price will adjust over a given period. A dynamic financial system, such as Forex, allows vast volumes of trade to take place with relatively little impact on demand or demand activity.
Whereas the Forex market is typically very liquid, it may change depending on the currency pair and the time of day.
MARKET SIZE AND LIQUIDITY
Unlike other capital markets such as the New York Stock Exchange, the Forex spot market has neither a fixed location nor a central exchange.
The Forex market is called an over-the-counter (OTC) or an “Interbank” market because the whole system runs electronically, through a network of banks, simultaneously over a 24-hour cycle; this means that the spot Forex market is distributed across the globe without a single position.
They could take place anywhere, even in space! The Forex OTC market is the largest and most common financial market in the world, traded internationally by a vast number of people and organizations.
In the OTC market, participants decide who they choose to compete with, based on the trading environment, the quality of markets, and the prestige of their trading partners.
The chart below shows the ten most active currencies traded. The dollar is the most exchanged currency, accounting for 84.9% of all transactions. The euro share is second at 39.1 percent, while the yen share is third at 19.0 percent. From the chart below, most major currencies are at the top of this list!
The chart above shows how often the US dollar is traded on the Forex market. It’s a whopping 84.9 percent of all transactions registered on one page!
THE DOLLAR IS THE KING
You’ve probably realized how often we talk about the US dollar (USD). When the USD is one-half of a major currency pair, and it makes up 75% of all markets, so it is a must to pay attention to the US dollar. The US $ is the King!
WHY TRADE FOREX – FOREX BENEFITS
There are many advantages of Forex trading. Here are just a few examples of why several people chose this market:
- NO COMMISSIONS
No clearance fees, no swap rates, no tax fees, no trading fees. Many retail brokers are paid for their work through a so-called “bid-ask spread.”
- THERE IS NO MIDDLE MAN
Forex trading excludes intermediaries and helps you to compete directly with the trader responsible for selling a currency pair.
- NO SET SCALE OF LOT
In the futures markets, the value of the lot or the deal shall be decided by the exchanges. The standard size of the offer for silver futures is 5,000 ounces. You determine your lot or place size in the spot Forex. It helps traders to invest in accounts that are as high as $25.
- TRANSACTION COST IS LOW
The retail purchase cost (the sum of the bid/ask) is usually less than 0.1 percent under standard market conditions. In more substantial retailers, the difference may be as small as 0.07 percent; this means everything depends on the power, so that will be clarified later.
- FOREX MARKET IS OPEN 24 HOURS A DAY
Why trade Forex? Because there’s no waiting for the door to ring. From Monday morning, starting in Australia to the end of the afternoon in New York, the Forex market rarely sleeps. It is perfect for people who choose to trade on a part-time basis, as you can pick anytime you want to trade: morning, midday, dinner, brunch, or sleep.
- NO ONE CAN DOMINATE THE MARKET
The foreign exchange market is vast and has so many players that no one person (not even the central bank or the mighty Chuck Norris) can control the stock price for a longer length of time.
- TRADE FOREX USING AUTOMATED ROBOTS
Yes, another reason to answer your question why trade Forex. You get the ability to do 100% automated trades using different Forex robots or EA available.
In Forex trading, a limited investment will influence a much higher overall value of the deal. Leverage gives traders the ability to make good profits, while at the same time keeping the risk of capital investment to a minimum.
For example, a Forex broker can offer 50-to-1 leverage, which means that a $50 margin deposit will allow a trader to buy or sell $2,500 worth of currency. Similarly, for $500, you might exchange $25,000, and so on. While all of this is enticing, let’s note that leve
rage can be a double-edged sword. Without careful risk management, this high degree of debt will lead to significant losses and profits.
- IT HAS HIGH LIQUIDITY
Since the foreign exchange market is so big, it is also highly liquid. This liquidity ensures that in normal circumstances, with a click of a button, you can quickly buy and sell at will, because there will typically be someone on the market ready to take the other side of your market.
You will never be “stuck” in a deal. You may also configure your online trading platform to automatically close your trade until your target income amount (limit order) has been hit or close a trade if a trade is going against you (loss order).
FOREX TRADING IS DECENTRALIZED
Unlike trading stock, you don’t need to go through a centralized market like the New York Stock Exchange at only one price.
There is no single price in the Forex market for a given currency, i.e., quotations from various currency dealers vary. It can be daunting at first, but that is what makes the Forex market so amazing! The market is so big, and the rivalry between dealers is so intense that you get a better price almost every single moment. And tell me, who doesn’t want to do that?
Also, one good thing about Forex trading is you can do it everywhere. It’s almost like swapping a baseball card.